Nasdaq, Dow slip on tech weakness, S&P 500 edges up

NEW YORK (Reuters) - The Dow and Nasdaq stock gauges fell on Friday as disappointing results from Microsoft and Google dragged on the market, while the S&P 500 index edged up to end at a second straight record high.

Stronger-than-expected results from General Electric Co (GE.N) and oilfield services company Schlumberger NV (SLB.N) helped the S&P 500 index to offset the tech losses and to post a fourth week of gains.

For the week, the Dow rose 0.5 percent, the S&P added 0.7 percent and the Nasdaq fell 0.3 percent. The benchmark S&P is up 18.6 percent for the year.

The high-profile tech sector disappointments prompted investors to lock in profits Friday after upbeat company results on Thursday and reassuring comments from Federal Reserve Chairman Ben Bernanke sent the Dow and S&P to record closing levels.

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Microsoft Corp (MSFT.O) was the biggest drag on all three major indexes, with the Nasdaq registering the day's steepest declines. Google Inc (GOOG.O) also weighed on the S&P 500 and Nasdaq. Both reported earnings that fell short of expectations.

"It seems like (tech) may be the one area where companies haven't gotten expectations sufficiently reduced," said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago.

"Stocks like Microsoft and Google I think were probably at the point where they had traded so nicely into earnings that people were really looking for something positive to be said."

The Dow Jones industrial average .DJI was down 4.80 points, or 0.03 percent, at 15,543.74. The Standard & Poor's 500 Index .SPX was up 2.72 points, or 0.16 percent, at 1,692.09. The Nasdaq Composite Index .IXIC was down 23.66 points, or 0.66 percent, at 3,587.61.

Analysts' estimates for corporate earnings have been reduced so much that investors believe the targets for the most part should be easily beaten.

Through Friday, of the 104 companies in the S&P 500 that have reported earnings for the quarter, 65.4 percent have reported earnings above analyst expectations, while 51 percent have topped revenue estimates, according to Thomson Reuters data.

Analysts expect S&P 500 companies' second-quarter earnings to have grown 2.9 percent from a year earlier, with revenue up 1.1 percent, according to Thomson Reuters data.

Also in the tech sector, Advanced Micro Devices Inc AMD.N tumbled 13.1 percent to $4.03 after the company said gross margins would fall, even as the chipmaker forecast stronger-than-expected revenue growth in the third quarter.

Encouraging earnings reports from other companies helped to offset the tech losses. Shares of General Electric rose 4.6 percent to $24.72 while shares of Schlumberger gained 5.4 percent to $82.74.